Correlation Between Inspire Medical and Telesis Bio

Can any of the company-specific risk be diversified away by investing in both Inspire Medical and Telesis Bio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Inspire Medical and Telesis Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inspire Medical Systems and Telesis Bio, you can compare the effects of market volatilities on Inspire Medical and Telesis Bio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Inspire Medical with a short position of Telesis Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and Telesis Bio.

Diversification Opportunities for Inspire Medical and Telesis Bio

-0.35

Correlation Coefficient

Inspire Medical  Telesis Bio

Very good diversification

The 3 months correlation between Inspire and Telesis is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Telesis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesis Bio and Inspire Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Inspire Medical Systems are associated (or correlated) with Telesis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesis Bio has no effect on the direction of Inspire Medical i.e., Inspire Medical and Telesis Bio go up and down completely randomly.

Pair Corralation between Inspire Medical and Telesis Bio

Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the Telesis Bio. But the stock apears to be less risky and, when comparing its historical volatility, Inspire Medical Systems is 11.24 times less risky than Telesis Bio. The stock trades about -0.1 of its potential returns per unit of risk. The Telesis Bio is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  271.00  in Telesis Bio on July 26, 2024 and sell it today you would earn a total of  27.00  from holding Telesis Bio or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.13%
Values	Daily Returns

Inspire Medical Systems  vs.  Telesis Bio

Inspire Medical Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Medical Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Inspire Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Telesis Bio

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Telesis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak forward indicators, Telesis Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspire Medical and Telesis Bio

The main advantage of trading using opposite Inspire Medical and Telesis Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, Telesis Bio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Telesis Bio will offset losses from the drop in Telesis Bio's long position.

The idea behind Inspire Medical Systems and Telesis Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.